END OF THE GOLD RUSH?

Real estate high-rollers take note: Bulgaria's era of wildly speculative deals is officially over. The country now has a new image: a stable economy and a much more predictable real estate market. The country's investment profile has changed, too. Before, foreign investors came to buy cheap properties, waited until their prices doubled - usually within a year - and sold them. Now they make long-term investments and prefer high-quality properties that can be let for a better price, rather than low-budget buys with poor potential for rental income. Today, investors aren't asking "when should I sell?" but "what is the rental value of my property?"

This year Sofia has once again snatched the title of "the city with the most expensive properties" from Varna. However, the capital has always held the record for the highest rental rates for all property segments, especially residential. Unfortunately for newcomers to the capital, renting an apartment in Sofia is more expensive than ever. For those who have been wise enough to invest in residential properties, it means higher rental yields.

HEART OF GOLD?

In a city like Sofia, with problematic infrastructure and nightmarish traffic, location is crucial. Rental rates are highest in the centre and will remain so for the next few years. In the broader centre, including neighbourhoods like Serdika, Zone B-5, Yavorov and the Medical Academy, the average rental price is seven to nine euros per sq m, although official sources sometimes quote figures from four to five euros. "Top centre" properties - those in the very heart of the city - are normally let for nine to 15 euros per sq m.

Offers like "luxury apartment, 150 sq m, 3,000 euros per month" are not unusual. These apartments guarantee swank on a par with five-star hotels. However, they are considered as a separate property segment targeted at diplomats or foreigners who visit Bulgaria for a few weeks and need the ultimate in comfort. For more modest landlords, the best way to find year-round occupants is to contact a rental management agency.

BEDROOM COMMUNITIES

At the other end of the scale are apartments in the suburbs of Levski, Druzhba 2, Benkovski, Iliyantsi, Obelya and Nadezhda. Three to four euros per sq m is the normal rental price for these districts. Despite the concrete jungle aesthetics, these districts are not always bad investment decisions and have an active target group of tenants, too. Since infrastructure in the "sleeping districts" - as Bulgarians call them - has been improving and Sofia has been expanding, rental rates are expected to rise soon.

Not all suburbs evoke Soviet times. Those at the foot of Vitosha such as Simeonovo (six to nine euros per sq m), Dragalevtsi (five to eight), Boyana (five to nine) and Bankya (six to nine) are prestigious - and pricey. They also have their disadvantages. In the past, these areas were separate villages and were only recently annexed to the capital. Infrastructure is therefore underdeveloped and roads to the centre of the city are too narrow to handle the intensive traffic, particularly all the SUVs and Hummers. This isn't the place to look for a small apartment - sprawling houses dominate the landscape.

THE GOLDEN MEAN

The zones between the broader centre and the suburbs are safe and reasonable investment areas. Apartments are not too expensive to buy (900- 1400 euros per sq m), yet rental levels are high. Prices here have their own logic, so don't bother trying to figure out why you have to pay different amounts in two regions equally far from the centre, located next to each other and perfectly similar. Hipodruma (five-six euros per sq m) and Belite Brezi (seven euros) is one such case. Some of the best districts in these zones include Strelbishte (seven euros), Izgrev (6.5 euros), Borovo and Bakston (six euros).

EXPENSIVE EXCEPTIONS

Of course, while the equation further-from-the-centre-equals-cheaper generally holds, there are a few unexpected exceptions. Certain districts are not technically top centre or are located far away from the heart of the city, yet have downtown prices. A good example is Lozenets, one of the greenest districts, where rental rates vary from eight to 12 euros. Oborishte is one of the most prestigious districts, closer to the top centre. The trap here is, at least according to brokers, that Oborishte means anything from Chavdar Bridge to the Doctors' Garden, so you can expect the same prices for the whole area. In fact, whereas near Madrid Blvd, rents of 10-12 euros per sq m are a good deals, tenants should not fork out more than eight for the farther side of Oborishte. Vitosha is one of the newest districts, located at the foot of its namesake mountain. Its architecture, infrastructure, quality and environment make seven to nine euros per sq m well worth it. Prices for apartments in gated communities in this area can even jump to 15 euros. The only district with the same rental rates as the top centre is Iztok.

OLDIES BUT GOLDIES

Quality is another important factor for higher rental yield. However, buyers should be aware of the Bulgarian paradox - the age of a residential building is not necessarily related to its quality. Apartments in buildings from the beginning of the 20th Century are usually three times more expensive to buy or rent than concrete block of flats from the era of "mature socialism" in the 1970s and 1980s. Unfortunately, the same holds true for brand new buildings. Many of Sofia's octogenarian residential buildings are of much higher quality than some "overnighters" (blocks of flats built lightning fast for quick profits). Age is not a reliable indicator of quality and each apartment should be selected on an individual basis.

Sofia's residential properties are probably the safest investment in Bulgaria considering both their rental and purchase value are increasing by at least 18-20 percent annually. Although an apartment in Sofia may not be the get-rich-quick goldmine of previous years, with some help from a reliable rental management company, it can become a goose that lays golden eggs in the years to come.